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Democrats manage expectations on quick consumer relief from China bill

The legislation is a central piece of Democrats' midterm messaging on fighting inflation, but the impact on prices for cars, computers and refrigerators won't be felt for years.
Image: Shipping containers, China
Stacks of containers to be shipped abroad at the Port of Taicang in east China on June 5, 2019.Ji haixin / Imaginechina via AP file

WASHINGTON — Democratic leaders are vowing to haul oil executives before Congress to grill them about price gouging. They're also holding hearings on rising child care costs and shipping practices that they say are clogging ports and pushing prices higher.

But as congressional Democrats try to preserve their tenuous majority, a sweeping China competitiveness bill has emerged as a key component of their midterm messaging about how Democrats are fighting to combat soaring inflation and provide relief to voters paying record prices for gas, groceries and other goods.

The U.S. Innovation and Competition Act calls for tens of billions of dollars in investments in U.S. semiconductor manufacturing and research to address the chip shortage that has spurred delays and higher prices for cars, computers, smartphones, refrigerators and other products.

Most Republicans have dismissed Democrats’ messaging that the legislation would cut costs — one called it a “campaign election-year slogan.” And even Democrats concede it could take years before consumers see any real benefits from a bill that's aimed at countering China’s economic and geopolitical influence.

“This will help, but the help is not going to be within weeks or months,” Sen. Jack Reed, D-R.I., said this week. “This is going to be a process of getting the bills through and then building the facilities. … It takes a while to build sophisticated production facilities.”

Sen. Chris Van Hollen of Maryland, who previously led campaign operations for both Senate and House Democrats, argued that the legislation would cut the cost of goods that have been delayed by strains on supply chains.

“I don’t think anyone’s arguing that this is going to take place overnight,” Van Hollen said in an interview, “but it will reduce the cost of lots of goods over a period of time.”

Backed by President Joe Biden, the $250 billion innovation bill is slowly winding its way through the legislative process. In June, the Senate passed its version of the bill — authored by Majority Leader Chuck Schumer, D-N.Y., and Todd Young, R-Ind. — in a big, bipartisan 68-32 vote, with 19 Republicans joining all but one Democrat.

Then, last month, House Democrats pushed through a partisan version, the America Competes Act, a much broader bill that includes climate change and labor provisions favored by liberals.

This week, the Senate is taking the first steps toward creating a House-Senate conference committee whose negotiators will try to hammer out key differences between the rival bills.

Support appears to be growing slightly: Two additional Republicans, Sens. Bill Cassidy of Louisiana and Jerry Moran of Kansas, voted to move the process forward this week after having opposed the measure last year.

Young, who is likely to win a spot on the conference committee, is aiming for a House-Senate deal by the Fourth of July, although the timeline could slip to just before the August congressional recess.

“Just because inflation is such an important issue … all of our constituents insist that we get this addressed quickly,” Young said. It takes about two years to build a semiconductor fabrication plant, he added, “so the sooner we get going on this, the sooner we come to conference, the sooner we can get this bill reconciled between the House and the Senate and pass this legislation, the sooner we can start building these fabs.”

Fewer than 12 percent of world's chips are manufactured in the U.S., according to the Semiconductor Industry Association.

Republicans, who need to net one seat this fall to win back the Senate, have been hammering Biden and congressional Democrats over inflation and supply chain woes, which have become huge political vulnerabilities. The Consumer Price Index rose by nearly 8 percent in February compared to a year earlier, and gas prices remain stubbornly high even as the price of crude oil has fallen recently.

Schumer and his fellow Democrats have been doing their best to show they share the pain voters feel in their pocketbooks. In a floor speech this week, Schumer said the bill to make the U.S. more competitive with China would address the chip shortage, which he called “an especially severe scourge on American families.”

The “need to pass this bill really boils down to two simple words: J-O-B-S, jobs, and C-O-S-T-S, costs! … It will lower costs by taking aim at supply chains, address the chip shortage and increase innovation,” said Schumer, one of his party’s top campaign messengers.

“There’s nothing abstract about the shortage of chips: It impacts Americans’ abilities to buy cars, refrigerators, phones and other household items,” he said. “Americans have faced long delays in finding these goods, and when they are available they now end up costing a lot more than they did before.”

But Democrats’ message that the competitiveness bill would lower costs is being met with heavy skepticism from Republicans.

“That’s a campaign election-year slogan,” said Sen. James Lankford, R-Okla. “Right now, everything they talk about is inflation to them, everything is suddenly inflation-related, because they need to have some answers.”

That’s a campaign election-year slogan. Right now, everything they talk about is inflation to them, everything is suddenly inflation-related, because they need to have some answers.

Sen. James Lankford, R-Okla.

Sen. Ron Johnson, R-Wis., said: “So more deficit spending, putting more dollars we don’t have, is going to tackle inflation? How’s that going to tame the inflation beast? No, I don’t buy it.”

Sen. Shelley Moore Capito, R-W.Va., who supports the bill, said Democrats “are just looking for some vehicle that will help them with an issue they haven’t faced up to, so I don’t know how that impacts inflation.”

A Senate Democratic leadership aide pushed back against the idea that Democrats’ messaging about the chip issue had somehow shifted in the campaign’s homestretch. Democrats, the aide said, have been consistently talking about addressing the chip shortage and shoring up domestic production for more than a year.

Schumer has said the bill’s positive impacts on the semiconductor industry would be long-term and that they would play out “over the next few years.”

“Republicans should step up and say what their plan is to fight inflation — not just pointing fingers,” he said last month.